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Author Topic: Should a bitcoinica clone be put online ?  (Read 6661 times)
Bitcoin Oz
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July 15, 2012, 07:21:05 AM
 #61

I picked up the domain Litecoinica.com just recently, and I think its a worthwhile idea to not only resurrect Bitcoinica, but to do something like it for Litecoin as well.

lol well played sir.

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July 15, 2012, 07:38:12 AM
 #62

No.

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July 15, 2012, 08:57:36 AM
 #63

You are one of a handful of people I would trust with non-trivial amounts of Bitcoin.  Cannot quite remALL GLORY TO THE HYPNOTOAD
FTFY

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July 15, 2012, 09:00:50 AM
 #64

No.

Exactly - I really enjoy the price stability of Bitcoin since Bitcoinica is gone. These days, Bitcoin can actually be used for payment.

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July 15, 2012, 12:11:15 PM
 #65

No.



this. the hell with bitcoinica and all its progeny
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July 15, 2012, 12:41:24 PM
 #66

You are one of a handful of people I would trust with non-trivial amounts of Bitcoin.  Cannot quite remALL GLORY TO THE HYPNOTOAD
FTFY
^^^^ This.

Second:  why not explore a GLBSE company?  Allow people to buy in plus that way there is an easy way to motion and what not. We would need to agree here how many shares you would get for the work you have already done and the hosting and whatnot.  I am also a rails guy, but not sure what time I would be able to commit to yet. 

What about the algorithm being public? Would this affect profitability?

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July 15, 2012, 03:54:44 PM
 #67

Quote
What about the algorithm being public? Would this affect profitability?
No.
Profit of Bitcoinica-like service goes from 90+ % of gamblers, that gamble at net loss.
You gamble --> you go deep in red --> forced liquidation --> "Bitcoinica" now in profit.

Even if algo is public, it does not matter how fair algo is.
Always will be number of people, that will gamble blindly or emotinally.

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July 15, 2012, 04:31:57 PM
 #68

I thought this through, and came to the conclusion that the concept needs to be re thought.  We should try to adopt a new principle here in Bitcoin Land: If the service can be run without the vendor holding your coins, it should.

I thought about whether there was a way to do this with escrow.  Everyone long bitcoin sends margin to an account, each short does the same.  The accounts do some kind of escrow thing, where they send their coins in equal proportions to holders on the other side.  You would need a trusted person to do this, that individual is sort of like a market maker.   Their job is to police the margin and settled closed contracts.  <insert details here>

In the end the worst that could happen, were the vendor or market maker to go poof, would be the coins defaulted to all the contract holders as if the trades didn't happen.  That way the liquidation goes to all the participants and any lost funds relative to the true position value only affects people trading through that market maker or "desk."  You could have competing desks, and new desks that let you trade things like oil and gold.  Commission would be split between the market makers who manage escrow of the funds, and the parent company (exchange) itself simply provides the signed code/server services.

Is there some one who gets the protocol enough who can figure it out?

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July 15, 2012, 04:34:38 PM
 #69

Hmmm maybe altcoinica so peeps can get the margin devil out of their system without risking too much?

Yes indeed. Being able to short any coin type against any other coin type would be very interesting and is where I will be heading with Open Transactions if I can actually figure out how shorting is woth implementing at all. I am still not clear on why anyone would loan an asset to someone else knowing the someone else is going to use it to lower its value so as to ideally be paying back less value than they borrowed...

-MarkM-


For a better explanation of how it worked, check this tube: https://www.youtube.com/watch?v=kdvTkddp1F0

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July 15, 2012, 05:04:41 PM
 #70

You are one of a handful of people I would trust with non-trivial amounts of Bitcoin.  Cannot quite remALL GLORY TO THE HYPNOTOAD
FTFY

I think it was that:

Instawallet is/was one of the few designs which I trusted as it made no pretenses of mining for more personal data than it needed to do it's job.

JAV seemed like a straight-up guy, and (iirc) handed things off to you.

Last I checked, my 50-ish BTC was still there.  But that was many months ago, and I'm only going by what the UI told me.


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July 15, 2012, 05:08:26 PM
 #71

I think it was that:

Instawallet is/was one of the few designs which I trusted as it made no pretenses of mining for more personal data than it needed to do it's job.

JAV seemed like a straight-up guy, and (iirc) handed things off to you.

Last I checked, my 50-ish BTC was still there.  But that was many months ago, and I'm only going by what the UI told me.
Thank you!

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July 16, 2012, 02:08:05 AM
 #72

Profit of Bitcoinica-like service goes from 90+ % of gamblers, that gamble at net loss.
You gamble --> you go deep in red --> forced liquidation --> "Bitcoinica" now in profit.

I'm more and more puzzled what makes people think Bitcoinica profited from force liquidation.
Force liquidation just protects them against losses.

The business plan of Bitcoinica seems to be quite obvious: they earn the spread. As long as people continue trading, this generates a constant stream of revenue, with a very small risk. (The only risk was that the market might move to fast for force liquidation to protect Bitcoinica from losses). And, moreover, the spread was so large as to make day trading not really feasible. You could make quite nice revenue though, when staying in for the more long term moves.

Thus, additionally we may conclude that the business plan of Bitcoinica was to attract every newbie in the bitcoin community, just to learn the hard way that the spread is to high for day trading. The fact that a lot of people hated Bitcoinica and constantly warned about "being zouthonged" just tremendously helped with that business. It helped hightening the thrill.


IMHO we should take Bitcoinica for what it is/was, and not condemning it for what it was not. As far as I can see, they indeed forwarded the neted amount of all positions into the real market. So it was not betting against their customers, thus not a bucket shop.
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July 16, 2012, 02:14:58 AM
 #73

Profit of Bitcoinica-like service goes from 90+ % of gamblers, that gamble at net loss.
You gamble --> you go deep in red --> forced liquidation --> "Bitcoinica" now in profit.

I'm more and more puzzled what makes people think Bitcoinica profited from force liquidation.
Force liquidation just protects them against losses.

The business plan of Bitcoinica seems to be quite obvious: they earn the spread. As long as people continue trading, this generates a constant stream of revenue, with a very small risk. (The only risk was that the market might move to fast for force liquidation to protect Bitcoinica from losses). And, moreover, the spread was so large as to make day trading not really feasible. You could make quite nice revenue though, when staying in for the more long term moves.

Thus, additionally we may conclude that the business plan of Bitcoinica was to attract every newbie in the bitcoin community, just to learn the hard way that the spread is to high for day trading. The fact that a lot of people hated Bitcoinica and constantly warned about "being zouthonged" just tremendously helped with that business. It helped hightening the thrill.


IMHO we should take Bitcoinica for what it is/was, and not condemning it for what it was not. As far as I can see, they indeed forwarded the neted amount of all positions into the real market. So it was not betting against their customers, thus not a bucket shop.


Yep.

https://www.bitcoin.org/bitcoin.pdf
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July 16, 2012, 03:13:06 AM
 #74

It just so happened that they benefited strongly from force liquidation. For all its life BTC valuation oscillated back and forth making force liquidation very profitable for them.

Valuation swings remarkably less now without BTC, it's a fact. A rally like this one would consistently correct itself with Bitcoinica in play, I doubt it's a coincidence, it happened many times.

I don't think it's a stretch to say the market is not liquid enough to bear a leverage trading platform the size Bitcoinica ended up having, without serious disruption.

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July 16, 2012, 03:52:34 AM
 #75

It just so happened that they benefited strongly from force liquidation. For all its life BTC valuation oscillated back and forth making force liquidation very profitable for them.

Valuation swings remarkably less now without BTC, it's a fact. A rally like this one would consistently correct itself with Bitcoinica in play, I doubt it's a coincidence, it happened many times.

I don't think it's a stretch to say the market is not liquid enough to bear a leverage trading platform the size Bitcoinica ended up having, without serious disruption.

I agree that Bitcoinica made bitcoin more volatile, but it only profited from forced liquidations if you assume the volatility made people trade more.  Force liquidations only recovered their lent funds since the loss had grown to the size of the available margin.  Bitcoinica profited only from the spread.

https://www.bitcoin.org/bitcoin.pdf
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July 18, 2012, 10:52:40 AM
 #76


I agree that Bitcoinica made bitcoin more volatile, but it only profited from forced liquidations if you assume the volatility made people trade more.  Force liquidations only recovered their lent funds since the loss had grown to the size of the available margin.  Bitcoinica profited only from the spread.

Trade more? You mean gamble more. People trade less if Bitcoin is volatile. Merchants are not in the gambling business. You don't sell stuff for Bitcoin if there is a real risk that Bitcoin looses 20% on the way to the exchange - even if there is a chance that it gains 20% at the same time.

Volatility is poison.

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July 18, 2012, 11:05:24 AM
 #77

I understand the new Bitcoinica owners found so many holes in the current code that they most likely decided to not to maintain and and instead develop a new platform from scratch. Unfortunately Bitcoinica came down before the new platform was ready.
The more I read the code, the more I see it is very very messy. I think the reason they'd want to rewrite it from scratch would have been for maintenability, not security.

No, it was for security.

Also Bitcoinica was losing money because its hedging algorithm was too simple, and during the last few months the site had negative profit. My role in the new Bitcoinica was to design a new hedging algorithm. The old algorithm simply had barriers that when reached would begin trading. These values were set manually on the site. I was designing better ways to assess the risk, and reduce it to acceptable levels (3 sigmas or more).

And this is why:


From: http://bitcoinmedia.com/market-volatility-has-gone-down/

Local volatility in the market has gone way down. In the beginning, Bitcoinica could have a non-optimal hedging algorithm and still profit. But now things are getting harder as the Bitcoin economy gets sharper.
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July 18, 2012, 03:16:34 PM
 #78

Thanks for posting here genjix.  I noticed you didn't address either the 'should it go back online?' nor the intelectual property questions.

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July 18, 2012, 03:20:13 PM
 #79

Thanks for posting here genjix.  I noticed you didn't address either the 'should it go back online?' nor the intelectual property questions.

Saying it was unprofitable kind of suggests not putting it back online unless davout likes losing his money.

https://www.bitcoin.org/bitcoin.pdf
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July 18, 2012, 03:31:45 PM
 #80

Thanks for posting here genjix.  I noticed you didn't address either the 'should it go back online?' nor the intelectual property questions.

Saying it was unprofitable kind of suggests not putting it back online unless davout likes losing his money.

Provided he was in the middle of a total rewrite and the hedging algorithm would be different, why carry the Bitcoinica name? it's a drawback at this point.

I'd probably run a completely new margin trading platform with my own people, once the liabilities are settled.

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